Amazon’s Alexa devices were some of the most exciting tech products of 2016, and immediately there were rumors that Apple was planning to follow suit with a standalone Siri — possibly even with the addition of facial recognition tech.
A new report, however, claims that despite its popularity, Alexa has been a massive money drain on Amazon so far. In 2016 alone, it lost Amazon $330 million, and this figure is set to rise to $600 million-plus this year.
It’s an interesting report, and one that is a stark reminder of the kind of costs a company like Apple would incur were it to go up against Echo. Sure, it’s got the money to fund it — but it also wouldn’t a license to print money any time soon.
A Bloomberg report back in September last year suggested that Apple has been investigating a standalone Siri device for around two years, and that it recently entered the prototype testing phase.
Much like the Amazon Echo, this device would be able to look up information and control smart home appliances using voice recognition — but possibly include facial recognition tech, courtesy of Apple’s acquisition of facial recognition startups Faceshift and Emotient.
But it’s worth pointing out that even with no sign of Alexa profits in sight for Amazon (provided today’s report is correct), Apple has plenty of ways a similar product could be a driver of profit. Investment in Siri can also help improve the user experience of iPhones, iPads, Apple TVs and, potentially in the future, other products like a possible Apple Car, thereby driving sales.
It could also be invaluable as a way of driving HomeKit-related purchases and, were licensing deals to be worked out, potentially another source of revenue as Apple continues its march toward being a services company.
Would a standalone Siri be something you’d get excited about? Leave your comments below.
Source: FT (paywall)
Via: Overspill
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
29 responses to “Amazon’s Alexa is a big hit — and a huge money drain”
Why not just build it into the dang AppleTV, boom done….
This. Makes a whole lotta more sense than making it a standalone product.
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I thought that was the rumor–that an Alexa-like Siri was coming to the AppleTV, including HomeKit controls. My brother gave me an Alexa/Echo Dot for Christmas and I rolled my eyes, but now I love it— and Alexa blows Siri away. And I am a pretty active Siri user. Sad to hear it’s not profitable yet.
Because you might want one in the kitchen, one in the bedroom etc.
Apple is a copycat company. Always doing after everyone else. I would never PURCHASE an APPLE PRODUCT.
Fine, then why are you here? You are free to have any opinion you like about Apple, but no one on this site is interested in your anti-Apple posts, especially because they’re generalizations and offer no specific criticisms.
Apple sucks. They or just like Radio shack copy and past.
I prefer Android devices over ios, and prefer Windows over Mac OS. But, the reason Apple does everything late is because they like to refine the technology. An example would be Samsung’s eye-scanner. They released it with the Note 7, and it was very slow, by the time you click the home button to unlock the device to use the retina scanner, the fingerprint would have already unlocked your phone. Now, in the iPhone 8, roumour has it that they will include this technology, and if they do, I can gaurentee it will function better than the samsungs.
True i notice that too. Why try to knock off everyone in the market let someone else eat for once. So greedy. Google and Apple went after Samsung when the note 7 crash. Now google and Apple after Amazon. Not everyone loves Apple. I dont like Apple because you force just to buy Apple pruducts. I like Android because i am able to purchase accesories etc that are not just Apple.
Then don’t
I second that emotion!
Apple is just like Radio Shack, you make we copy it.
Apple is a copycat company? Basically, Mr. Smith, you’re an idiot.
Apple tend not to be the first in a field, but the first to do it right.
Then everyone copies them.
Apple doesnt get it right that’s why they are trailing Samsung.
You really need to get laid…..assuming any woman/man/sheep/whatever could deal with your “expert” opinions.
Of course, Alexa products lose money — that’s the Amazon way. They have an agreement with Wall Street that allows them to operate by a whole different set of rules and have their stock trade at ridiculous P/E ratios.
Why is the Alexa draining money? Are they being undersold? Why no link to the new report on the Alexa? Did I miss it in the article?
The source is at the bottom, Its the FT, which in turn was reported by Overspill
Siri sucks, so, no.
Siri is garbage. Try fixing the phone application first. Google search is far superior when asking questions than Siri that just shows page links
Google doesnt work well as Alexa.I try google it never recognizes my voice, freezes and it searches for incorrect items. I return it.
No. Siri underwhelms.
Alexa is a pure long-play by Amazon. It’s meant to capture buying behaviour and embed Amazon even deeper within a user’s personal ecosystem. In the future, it’ll likely be worth every penny.
Exactly.
Glad to see you agree!
This “analysis” (and I use the term loosely) ignores how Echo drives revenue. Every time someone with an Echo says “Alexa, buy me toilet paper,” Amazon makes money. Apple has no similar revenue stream.
Of course, but why bother, Siri is not very good and not even close to Alexea.